The Financial Conduct Authority (FCA) has imposed a hefty fine of £29 million ($38.5 million) on Starling Bank for significant shortcomings in its anti-money laundering (AML) controls and sanctions screening systems. The penalty, announced on Wednesday, stems from issues that have persisted since 2017, highlighting the bank’s inability to adapt its financial crime prevention measures in line with its rapid growth.
According to the FCA, Starling Bank’s measures to combat financial crime failed to meet regulatory expectations. The watchdog reported that the bank repeatedly breached critical regulations, including the prohibition against opening accounts for high-risk customers without adequate safeguards in place.
The FCA emphasized that the deficiencies in Starling’s AML framework raised serious concerns about the bank’s ability to manage financial crime risks effectively. “As a rapidly growing digital lender, it is imperative that Starling Bank ensures its systems and controls are robust enough to meet the challenges of its expanding customer base,” the FCA stated in its announcement.
In response to the fine, Starling Bank acknowledged the FCA’s findings and expressed regret over the lapses. The bank assured stakeholders that it is taking significant steps to enhance its compliance measures and prevent future occurrences. “We are committed to maintaining the highest standards of compliance and will continue to invest in our systems and processes to strengthen our defenses against financial crime,” a spokesperson for Starling Bank said.
The penalty marks a notable intervention by the FCA, which has been increasingly vigilant in regulating the digital banking sector amid growing concerns over financial crime. Industry experts suggest that the case serves as a reminder for all banks, especially digital lenders, to prioritize compliance and adapt swiftly to the challenges that accompany rapid growth.
As Starling Bank navigates this setback, the broader banking community will be watching closely to see how it rectifies these issues and enhances its commitment to regulatory compliance. The FCA’s actions underscore the importance of rigorous AML practices in maintaining trust and integrity within the financial system. (Source- Reuters)
